Will I pay tax on Sharesave profits?

I have paid £3,600 into my employer's Sharesave scheme over three years. I have accrued 2,470 shares I can buy for 153p each in the New Year.

Their open market value is much higher as they are currently trading at around 414p. Will I have to pay tax when I sell the shares in January? D.V.M., Stafford

Simon Moon from This is Money replies: A Sharesave scheme is a form of contract under which employees commit to pay between £5 and £250 each month over a period of three or five years for the option to buy shares at a price fixed at the outset.

If the shares do well, as yours have, there is the opportunity to make a healthy profit. In your case this would be about £6,400 assuming the shares hold their value.

HMRC says: 'If you get your share option under a SAYE share option scheme, which has been approved by us, you do not have to pay income tax when you receive your share option or, in most circumstances, when you exercise it to buy shares.'

At the end of the fixed period the contract pays a bonus. This will be set out in the contract you signed at the outset and is likely to be equivalent to about two monthly contributions.

HMRC adds: 'An additional tax advantage is that you can transfer any shares you get from that scheme into a stocks and shares Isa provided your Isa manager agrees to take them.'

Sharesavers who commit to five years, can choose to leave their savings untouched for a further two years. This will entitle them to a higher bonus after a total of seven years without having to make any more monthly contributions.